A home sale has many moving parts which all have to be in sync proceeding the closing date. Oftentimes though, there are delays or kinks in the chain of steps involved in the sale process that require a change in the closing date.
Rescheduling the closing date will typically have some repercussions on the contracting parties involved. Whether you are a buyer or a seller, it’s important to know what happens if your closing date is changed.
What Is a Closing Date?
Also referred to settlement or completion, a closing is set at the time of the home purchase negotiations. Usually, this final stroke is scheduled several weeks following the formal acceptance of an agreed-upon selling/buying price by both parties.
On average, the preparation of the final paperwork typically takes 50 days from the time an offer is accepted to the date of closing. Take note that, besides the seller and the buyer, there are others involved in this process. It also involves the agents drawing up the sale contracts and those finalizing other documents related to the property transfer.
Reasons For Delays
One of the most common causes of home closing date delays is a problem with the all-important bank appraisal of the property upon which a mortgage approval depends. If the home’s appraised value doesn’t match with the buyer’s offer, a lender could deny mortgage and thus send the buyer in a frantic search for alternative financing. This kink would not only delay the settlement date but could also take the sale process to a renegotiation of the selling price.
The results of a home inspection can likewise delay closing dates. This happens if a home inspector discovers certain issues in the residence that the buyer would want to be repaired or the price renegotiated. If grave enough, any home issue discovered could likewise adversely affect the property’s appraised value, in which case the problem becomes even more complicated.
The review of a title company, which is required in every property sale, can also affect the home closing date. This review seeks to ensure that the seller is the rightful owner of the property and determines if there are any liens or unpaid obligations attached to it. A closing could be delayed if such liens exist, as the buyer and seller would have to negotiate on whose account those would be.
Unexpected personal issues can also bring a setback on closing. More time may be sought by either seller or buyer in cases like family emergencies, health issues or unforeseen change in employment.
Closing Delayed: What to Expect
Failure to close on an agreed-upon date could lead to a cancellation of the purchase contract if this is explicitly provided in this prior agreement. Another thing to watch out for, especially for buyers, is the arrangement with the lender who often gives “rate locks.”
These are specific mortgage points and interest rate extended to borrowers provided they close on or before a specific date. A buyer may have to pay a penalty for failure to close on time.
A closing date change can likewise shift tax payment burden either to the buyer or seller. This is because the tax bill portion is prorated based on the home purchase date.
Other extra expenditures that may arise when closing dates change include rescheduling fees that movers may charge. The rental on temporary housing also comes into the picture for buyers if they have already sold their home or a rental lease has expired prior to the closing date.
Avoiding Delays & Changes
All these hassles that closing delays bring can be mitigated or avoided through the purchase contract which should have a realistic closing date. Exert all efforts to target a reasonable target within a certain time period and have some wiggle room for contingencies or unforeseen circumstances.
Lastly, monitor closely all the steps involved in the home sale process and ensure that everything proceeds like clockwork toward the closing date. Your realtor should keep close contact with you every step of the way so that obstacles can be addressed early enough and the closing date won’t be adversely affected.
Have more real estate questions?
The Barrett Spray Team at Keller Williams Advantage Oviedo is here to guide you through every step of the home buying or selling process.
Give us a call at 407-925-8404 today and we will help you find the perfect home!